Will cannabis be coming to c-store shelves? It’s likely not a matter of if, but when.
As cannabis smoking continues its way toward personal and social acceptance, rulemaking remains poised between resistance and advocacy. As of today, the balance is tipping toward advocacy. While therapeutic and physical benefits have been recognized for centuries, U.S. medical regard for cannabis didn’t gain legal traction until 30 years ago when California allowed its prescribed use.
Since then, federal hemp rulemaking and state cannabis laws have helped to overcome moral prejudice and untangle related financial and criminal risks. Today, medical marijuana is prescribed for epilepsy, multiple sclerosis, post-traumatic stress disorder and glaucoma among other ailments. Twenty-four states now permit licensed cannabis dispensaries and have removed consumer penalties for recreational use.
Nearly as many c-store shoppers use cannabis on a regular weekly basis as smoke cigarettes. Sharing a joint has been a social escape for decades. Research on medical benefits of cannabis sativa progressed in the late 1970s. Regular cannabis use more than doubled from 2013 to 2023.
Today, data from Gallup and the National Institutes of Health (NIH) show that between 11% and 15% of adults enjoy daily or near daily use. Some 29% smoke cannabis at least monthly, while 14% of 19-40-year-olds are vaping cannabis compounds as of December 2023. And, 70% of the U.S. population favors legalized cannabis; up from 12% in 1970.
Cannabis smokers may have a different outlook on life, but almost all of them are c-store customers. Usage is less frequent than tobacco, while their daily and weekly habits and routines are pretty much the same.
Cannabis smokers buy gas for their cars and trucks, drink coffee and cold beverages, and eat more than their share of snacks. They’re younger than tobacco users, which defines them as part of the future. Most also smoke cigarettes.
Defining A Cannabis Products Category For The Future
Removal of hemp’s controlled substance status by the U.S. Department of Agriculture opened the door. Cannabidiol (CBD) and other low-THC derivatives are already in a range of retail doors including independent c-stores. They’re on shelves as vapes, hemp cigarettes, cigars, pouches, energy drinks, edibles, topical balms, gel-caps and more. All of them are outside federal tobacco tax and rulemaking of the FDA.
Cannabis portioned for smoking, by contrast, is still in the dispensary stage. While health risk evaluations are ongoing, it’s conveniently and legally available to 76% of the U.S. population. To profitably function in a c-store environment, cannabis will still need to settle on standardized package matrix of weights and strengths. The array of intensity, varietals, buds and origins will become familiar through brand marketing. Cigarette brands and styles number in the hundreds, so this shouldn’t be a challenge.
Cannabis accessories ranging from rolling papers, wraps, cones and tubes, to lighters, grinders and trays are in stock. For example, emerging brand High Tea offers cones and wraps in popular flavors, made from tax-free chamomile tea, not tobacco. Clipper lighters’ unique joint-packing tool has become a must-have for marijuana smokers. C-store rolling papers unit sales grew to $480 million over the past two years, outpacing cigarettes, cigars and vape, according to Nielsen.
The Taxman Cometh
The biggest retail challenge will be unit pricing and taxation. A 3.5-gram dispensary purchase (an eight or one-eighth ounce) averages anywhere between $22 and $45. State and local taxes are already in place and can easily drive the price to $60. In California, Colorado and Delaware, recreational cannabis carries a 15% excise tax. Other legal states collect tax by weight, up to $50 per ounce. In topical and ingestible forms, taxes are still new territory.
Marketing companies specializing in cannabis offer retail promotions and shelf planning. Sorting out a c-store product array or retail section won’t be impossible, but it will alter hiring practices and training. If you want to see where it’s headed, visit the Total Products Expo (TPE) at the Las Vegas Convention Center, Jan. 29-31.
The Path to Inclusion
C-store policy is being continuously reviewed as state laws change. The National Association of Convenience Stores’ (NACS) position is that cannabis should be entirely de-scheduled, allowing c-stores in legal states to compete with dispensaries. Federal regulation would codify and align with scientific research and understanding of safe use. And of course, really cool warning labels.
The key step will be to shape a pathway that aligns federal cannabis laws with various state statutes. The STATES ACT 2.0 (HR 6673), now under congressional consideration, will de-schedule federal regulation of marijuana as a controlled substance. It will free restricted states to update their regulations if needed, while cannabis-legal states will no longer be in conflict with federal laws that make banking transactions involving cannabis crime. In states where recreational cannabis is illegal, these may also fall under money laundering and racketeering.
Afterthoughts
The question is not so much where this leaves us. Rather, where are we going? Once begun, a dedicated c-store cannabis section with beverages, edibles, smokes and vapes will take at least a couple of years to invent best practices, likely beginning with independents or very small chains. Organizing a cannabis backbar will bring new sales, but it will also change the profile of c-store shoppers as tobacco continues to decline. Each change creates two more.
California has more than 3,600 medical and recreational marijuana dispensaries, yet California only ranks 10th in legal marijuana sales. The state’s new rules will allows cannabis dispensaries to offer musical entertainment and serve food and drink. But there will still be no smoking.
John Geoghegan has spent the last 30 years in the tobacco business, including vice president strategic planning at General Cigar Co., U.S. manager for DjEEP Lighters, head of marketing for Kretek International Inc. and manager of LaMirada Cigar Co. He began his career 57 years ago at Procter & Gamble. Geoghegan is a graduate of the University of Cincinnati. He lives in Laguna Niguel, Calif.
